As a result of this increase, it is expected that home, auto, and other loans will become more expensive.
According to the SBI website, the overnight, one-month, three-month, and six-month MCLR rates have all been raised by 10 basis points to 6.75 percent, 6.75 percent, 6.75 percent, and 7.05 percent, respectively. Similarly, MCLR for tenor of one year stands at 7.10 percent, two year at 7.30 percent and three years at 7.40 percent.
Last week, Bank of Baroda (BoB) announced a 0.05 percent rise in marginal cost of funds-based lending interest rates on loans, effective April 12, 2022. This was announced by BoB through a regulatory filing with the stock exchanges.
What is MLCR?
Marginal Cost of Funds based Lending Rate (MCLR) has replaced base rate according to the new RBI guideline for commercial banks to set lending rates.
The marginal cost of funds is an important factor in determining the MCLR. Any changes in key rates, such as the repo rate, which affect the marginal cost of funds, will have an effect on the MCLR. When the reset date of their home loan arrives, the increase in MCLR will be felt in their EMIs (equated monthly instalment).
The Reserve Bank of India’s (RBI) kept the policy rates unchanged at its monetary policy meeting on April 8, 2022.